Turning Big Data Into Smart Data

Companies are getting more data; in fact, the typical company doubles the amount of data it stores every two years. But more data isn’t necessarily a good thing.

Data, after all, is inherently dumb. Getting more of it often seems to compound its lack of intellect.

Plus, data brings with it some significant baggage.

“All that data can be a bother, an unwise expense,” said Jeanne Ross, director and principal research scientist at MIT’s Center for Information Systems Research, speaking recently to a group of executives gathered for a recent Sloan School of Management Executive Education program, “Revitalizing Your Digital Business.”

Large volumes of data present security and reputation risks, given how often data ends up in compromising positions. The challenge for executives, she said, is to change the business culture to make the expense and risk of data worth it.

“Think about every single person who takes action in your company. In other words, pretty much everyone. The big opportunity is at the operational level,” Ross said. She pointed to Seven-Eleven Japan, which has pushed decision-making down to the store level — in fact, to the level of clerks. Store clerks decide what goes on the shelves in their individual Seven-Elevens. These clerks push incredible inventory turns; some 70% of the products on the shelves are new to stores each year. This might sound like a recipe for disaster to anyone who’s seen the movie Clerks, but Seven-Eleven Japan has been the most profitable Japanese retailer for 30 years running.

Ross said there are three main cultures companies adopt around data:

1. A culture of heroics. In the culture of heroics, individuals respond to requests and take on extra tasks, like finding an item a customer wants when inventory says it’s out of stock. To the customer in the front of the store, the person who found the item is a hero — but it may be that the item brought out to satisfy that customer had already been sold online or over the phone, and simply hadn’t been shipped yet. That means some other customer is going to be unhappy unless steps are taken to expedite restocking and shipping.